Executive SummaryAs 2023 progresses, macroeconomic headwinds and geopolitical tensions are mounting, leading investors to adopt a cautious stance. The global market’s stagflationary conditions, characterised by high inflation and low growth, are significantly shaping investment behaviour and policy decisions. Governments and central banks remain vigilant, raising interest rates to manage inflation while balancing the risks of recession and ensuring financial system stability. In the wake of several bank runs in the US in 2023, investors are maintaining a state of heightened alertness, actively seeking out secure avenues to safeguard their wealth. The Singapore government’s intervention in the real estate industry carries significant implications for both investors and homeowners. Multiple waves of cooling measures have been introduced in late 2022 and 2023, alongside an increase in Government Land Sales (GLS) over the past few quarters. The government’s objective is to maintain price stability in the real estate market and prevent it from spiralling upwards under inflationary pressures and foreign buying interest. Housing affordability has emerged as a key concern, prompting policymakers to consider changes that may alleviate public anxiety on the matter. These policy shifts are likely to have far-reaching consequences for the industry as a whole. Residential properties in Singapore continue to climb higher this quarter as the stagflationary environment continues to drive up the prices of assets like real estate. Overall, while volume is lower than the earlier stages of the pandemic real estate boom, the transaction value of residential properties is on the rise for almost every residential segment. On the other hand, recessionary risks and macroeconomic headwinds have repressed the transaction value in commercial real estate. However, well-capitalised investors may be able to find opportunities to position themselves for the next bull market. The first quarter of 2023 has seen real estate prices continue to rise due to the impact of the stagflationary environment. As investors seek a hedge against inflation, many are turning to real estate as a viable option. While the recent introduction of tighter cooling measures and increased supply in the medium-term may lead to a tapering and stabilisation of prices in the coming years, inflationary pressures are likely to persist in the short-term, particularly in markets with medium-low transaction volumes.
Foreword by Melvin Lim CEO, Co-founder PropertyLimBrothers (PLB)As we look to the future of the real estate market in 2023, it is clear that investors and homeowners alike must stay vigilant and adapt to the changing market conditions. Despite the uncertainty and challenges, there are still opportunities to be found, and we remain cautiously optimistic about the direction of the market. With prices continuing to climb due to ongoing inflationary pressures and increased demand from both local and foreign investors. This has made it more difficult for local homeowners to decide what to do with their property in Singapore. At PropertyLimBrothers, we are committed to helping our clients navigate the real estate market with integrity and professionalism. We understand that the real estate market can be daunting and unpredictable, but with our extensive experience, data-driven insights, and creative marketing strategies, we are confident in our ability to add value to our clients’ property journeys.
As always, our mission is to provide the best-in-class service and education to our fans, followers, and clients. With the current macroeconomic headwinds and geopolitical tensions, we understand the importance of staying informed and up-to-date with the latest developments in the finance and real estate sectors. This report will provide you with valuable insights into the state of Singapore’s real estate market in Q1 2023. From government interventions to the impact of stagflation, our team of experts has analysed the data and provided actionable recommendations for investors and homeowners alike. Our hope is that this report will serve as a valuable resource for our clients, helping them make informed decisions about their real estate investments and providing them with the knowledge they need to thrive confidently in 2023 and beyond. Thank you for choosing PropertyLimBrothers as your trusted real estate partner. We look forward to continuing to serve you and guiding you through the ever-evolving landscape of the Singapore real estate market.
When it comes to property, risk is at its highest point when the property you invested in does not appreciate.
MethodologyThe information presented in this report is primarily sourced from URA data, but we also incorporate data from other sources such as Squarefoot, Edgeprop, S&P Global, TradingEconomics, and Statista to complement it. In addition, we use data from reputable banks and consulting firms’ corporate reports as well as economic data from various government websites in Singapore, the United States, and other countries, including data from Central Banks worldwide. Our report focuses on significant global macroeconomic trends and examines how they could impact Singapore’s real estate market, taking into account changes in monetary policy and growth projections. We carefully consider both demand and supply factors in Singapore’s property market and use a combination of macro and micro conditions to provide an in-depth analysis. Based on our assessment, we offer our perspective on the likely performance of the real estate market in the upcoming quarters. The micro analysis primarily focuses on examining price and volume movements within the real estate market. To identify any disparities in the performance of various market segments, we utilise a non-parametric subsampling method. We obtain performance data from URA and then create sub-samples for analysis, which are divided based on factors such as property type, size, location, and other characteristics. The approach we use is mainly descriptive in nature, but we also incorporate some qualitative analysis and comments on consumer sentiment and behaviour. This Q1 report builds on the previous reports, which highlighted how the persistent macroeconomic challenges, including high inflation and interest rates accompanied by low growth, would continue to have an impact on Singapore’s real estate market in 2023.
- Stagflationary Environment driving Investment Behaviour
- Government Intervention in Real Estate
- Finding Market Direction after Macro Shifts
- Macro Watchlist for Market Participants
- Quarterly Growth in Residential Real Estate Segments
- Quarterly Growth in Commercial Real Estate Segments
- Relative Supply Trends & Money Flow Analysis
- In Focus — Opportunity Spaces for 2023Q2 and Beyond